FHA 203(b) Loans and Investment Properties
In general, you cannot buy an investment property with an FHA 203(b) loan, as the FHA requires that all 203b loans be used to finance owner-occupied properties. However, if you purchase a 2-4 unit property and use one of the units as your primary residence, you can rent the other units out in order to earn rental income. In addition, if you assume a 203b loan from a current FHA borrower, you will not have to live in the home as your primary residence (or at all). Instead, it can be considered a HUD-approved second home, or an investment property.